Real and Fake Energy Proposals

As we noted here, Senator John Cornyn is carrying on a discussion of energy policy on his web site this week. Yesterday, Alaska Governor Sarah Palin chipped in with a plea to open up ANWR for exploration and development. Some excerpts:

[T]he debate about energy policy is no longer theoretical or abstract. Our failure to enact an energy policy is having real consequences for every American in their daily lives and has begun to affect America’s place in the world. Alaska is ready, willing, and able to assist the nation in addressing our acute and expanding energy needs. Like many other states, we would like the opportunity to help.

Congressional approval of responsible petroleum development in the coastal plain of Arctic National Wildlife Refuge (ANWR) – the most promising unexplored petroleum province in North America – would be of incalculable benefit to my state and our nation.

As this is written, the Alaska Legislature is considering proposals to commercialize and transport the vast quantities of clean-burning natural gas that are located on the North Slope.

Already, 32 trillion cubic feet of natural gas reserves have been identified, and many trillions of additional cubic feet are thought to exist on the North Slope and in off shore areas of Alaska.

The Democrats, meanwhile, are busily trying to fool the American people into believing that they are doing something about high gasoline prices. Today they will bring to the floor of the House the “Drill Responsibly on Leased Land” act in order to convey the false impression that they, like a large majority of Americans, want to drill for oil and gas to meet the country’s energy needs.

In fact, the Dems’ cobbled-together statute won’t generate a single barrel of new oil production. It contains a series of provisions that add nothing to existing law or existing energy production capabilities. The “Drill” Act would re-enact the “use it or lose it” concept that is already the law, i.e., energy leases that are not exploited within a given period of time expire. It purports to “open up” land in Alaska for oil exploration. But the land in question is NPR-A, not ANWR:

NPR-A is already open to oil exploration and development. That isn’t happening, though, because the Corps of Engineers hasn’t been able to get a permit to build a pipeline, and the Sierra Club and other environmental organizations have tied up proposed projects in litigation. Moreover, NPR-A is a less desirable area for exploitation than ANWR. It has about the same amount of recoverable oil, but spread out over ten times the area as ANWR’s 1002. Both environmentally and economically, ANWR is a far superior place to recover oil, and it is close to the existing Alaska Pipeline. You can read about ANWR and NPR-A here.

So the Dems’ proposal is a fig-leaf will do nothing to increase domestic energy supplies. It is designed purely to fool voters. Republicans offered a series of amendments in committee that actually would have allowed increased energy production, but the Democrats voted them all down.

Ø The Act has been dubbed the Drill Responsibly in Leased Lands – or DRILL – Act of 2008. However, nothing in its following sections will increase domestic energy production beyond what is already scheduled.

Section 2. Lease Sales in the National Petroleum Reserve – Alaska

Ø This section requires that lease sales be conducted once a year. This is something that is currently allowed, but not done because NPRA’s Indiana-sized area has no infrastructure. In addition, a history of dilatory lawsuits has made it an area of limited interest to energy producers. This section also seeks to expedite permits in the NPR-A, a positive step. However, it does nothing to tackle the biggest problem with developing new energy: dilatory protests and lawsuits. Any genuine effort must involve putting a stop to the legal blocking and tackling of groups opposed to American energy production. Incidentally, Congress should address this issue nationwide.

Ø Pipelines in NPRA have been held up by appeals, protests and lawsuits, not energy producers.

Section 4: Alaska Natural Gas Pipeline Project Facilitation

Ø This section authorizes the president to exercise authority he already has to facilitate something he is already facilitating. In short, this section achieves nothing.

Section 5: Project Labor Agreements

Ø A last minute bonus prize for organized labor, but creates no new energy whatsoever.

Section 6: Ban on Export of Alaskan Oil

Ø A nice talking point, but the United States does not export any Alaskan oil, and has not since 2000. California exports more petroleum products than Alaska.

Section 7: Issuance of New Leases

Ø This section was crafted using synonyms to restate existing laws, including:

· The Mineral Leasing Act (for onshore production), which stipulates that an oil company must have a producing well within 10 years or surrender the leases. Source: 30 U.S.C. 226(e)

· The Outer Continental Shelf Lands Act: (for offshore production), which stipulates that an oil company must produce energy between 5 to 10 years (in the government’s discretion) or surrender the lease. Source: 43 U.S.C. 1337(b)

· Penalties in U.S. Code: The federal government can cancel a lease if a producer fails to live up to the terms of the lease, the law or federal regulations. Source: 30 USC 188(a) and (b) and 43 CFR 3108.3 (a) and (b).

Section 8: Fair Return on Production of Federal Oil and Gas Resources

Ø This section restates current law and practice. In fact, the government increased royalties on outer continental shelf leases by 50% last year, making it more expensive to produce energy in America.